Quote:In finance, default occurs when a debtor has not met his or her legal obligations according to the debt contract, e.g. has not made a scheduled payment, or has violated a loan covenant (condition) of the debt contract. A default is the failure to pay back a loan.[1] Default may occur if the debtor is either unwilling or unable to pay his or her debt. This can occur with all debt obligations including bonds, mortgages, loans, and promissory notes. National default refers to the idea of an entire government unwilling or unable to pay a required national debt.
Of course, US government cutting entitlement is not default. Is US government changing the law a default on its obligation?
(10-10-2013, 07:47 PM)freedom Wrote: [ -> ]Quote:In finance, default occurs when a debtor has not met his or her legal obligations according to the debt contract, e.g. has not made a scheduled payment, or has violated a loan covenant (condition) of the debt contract. A default is the failure to pay back a loan.[1] Default may occur if the debtor is either unwilling or unable to pay his or her debt. This can occur with all debt obligations including bonds, mortgages, loans, and promissory notes. National default refers to the idea of an entire government unwilling or unable to pay a required national debt.
Of course, US government cutting entitlement is not default. Is US government changing the law a default on its obligation?
No, cutting entitlement is not a default if the entitlement law were repealed or amended. If they simply fail to pay, I would argue that it is like an insurance company failing to pay claims in order save money to fulfill their bond obligations.
(10-10-2013, 07:53 PM)Clement Wrote: [ -> ] (10-10-2013, 07:47 PM)freedom Wrote: [ -> ]Quote:In finance, default occurs when a debtor has not met his or her legal obligations according to the debt contract, e.g. has not made a scheduled payment, or has violated a loan covenant (condition) of the debt contract. A default is the failure to pay back a loan.[1] Default may occur if the debtor is either unwilling or unable to pay his or her debt. This can occur with all debt obligations including bonds, mortgages, loans, and promissory notes. National default refers to the idea of an entire government unwilling or unable to pay a required national debt.
Of course, US government cutting entitlement is not default. Is US government changing the law a default on its obligation?
No, cutting entitlement is not a default if the entitlement law were repealed or amended. If they simply fail to pay, I would argue that it is like an insurance company failing to pay claims to fulfill their bond obligations.
That would only happen if the US government chooses to default. They have the means not to default by amending the law.
Just like people owing money choose not to pay though they have the money.
Is it the ultimate stupidity?
(10-10-2013, 07:55 PM)freedom Wrote: [ -> ] (10-10-2013, 07:53 PM)Clement Wrote: [ -> ] (10-10-2013, 07:47 PM)freedom Wrote: [ -> ]Quote:In finance, default occurs when a debtor has not met his or her legal obligations according to the debt contract, e.g. has not made a scheduled payment, or has violated a loan covenant (condition) of the debt contract. A default is the failure to pay back a loan.[1] Default may occur if the debtor is either unwilling or unable to pay his or her debt. This can occur with all debt obligations including bonds, mortgages, loans, and promissory notes. National default refers to the idea of an entire government unwilling or unable to pay a required national debt.
Of course, US government cutting entitlement is not default. Is US government changing the law a default on its obligation?
No, cutting entitlement is not a default if the entitlement law were repealed or amended. If they simply fail to pay, I would argue that it is like an insurance company failing to pay claims to fulfill their bond obligations.
That would only happen if the US government chooses to default. They have the means not to default by amending the law.
Just like people owing money choose not to pay though they have the money.
Is it the ultimate stupidity?
But the right wing members of the republicans are being opportunistic in trying to amend the law in this way because they would not have the votes to do so otherwise. They can also avoid default by raising the debt ceiling. One violates the principles of democracy, the other doesn't.
(10-10-2013, 07:58 PM)Clement Wrote: [ -> ] (10-10-2013, 07:55 PM)freedom Wrote: [ -> ]That would only happen if the US government chooses to default. They have the means not to default by amending the law.
Just like people owing money choose not to pay though they have the money.
Is it the ultimate stupidity?
But the right wing members of the republicans are being opportunistic in trying to amend the law in this way because they would not have the votes to do so otherwise. They can also avoid default by raising the debt ceiling.
Then why would there be a debt ceiling? There is debt ceiling so the US government will think twice when they try to spend like crazy.
(10-10-2013, 08:07 PM)freedom Wrote: [ -> ] (10-10-2013, 07:58 PM)Clement Wrote: [ -> ] (10-10-2013, 07:55 PM)freedom Wrote: [ -> ]That would only happen if the US government chooses to default. They have the means not to default by amending the law.
Just like people owing money choose not to pay though they have the money.
Is it the ultimate stupidity?
But the right wing members of the republicans are being opportunistic in trying to amend the law in this way because they would not have the votes to do so otherwise. They can also avoid default by raising the debt ceiling.
Then why would there be a debt ceiling? There is debt ceiling so the US government will think twice when they try to spend like crazy.
The problem is, the spending laws were passed, the tax laws were also passed. It'd be like me telling you to 1) collect $10, 2) spend $20, 3)you can only borrow up to $5. Btw, much respect to you freedom for being able to debate this controversial topic in a mature way. If only the paid politicians in the us can do the same.
(10-10-2013, 08:14 PM)Clement Wrote: [ -> ] (10-10-2013, 08:07 PM)freedom Wrote: [ -> ]Then why would there be a debt ceiling? There is debt ceiling so the US government will think twice when they try to spend like crazy.
The problem is, the spending laws were passed, the tax laws were also passed. It'd be like me telling you to 1) collect $10, 2) spend $20, 3)you can only borrow up to $5. Btw, much respect to you freedom for being able to debate this controversial topic in a mature way. If only the paid politicians in the us can do the same.
The law is signed because it is right. If I am not wrong, execution of ObamaCare was not signed into law. A lot of entitlement is signed into law, but not the execution. So there is no default to speak of as the law never says the government must pay for it. Something like the government can choose to pay for it if it is willing and has the means（My interpretation only).
Similarly like Dodd Frank Act. It was signed into law, but not how to execute it.
Well in the latest news on cnn, the republicans seem to be caving in and open to a increase in the debt ceiling. Looks like it's over for the time being.
just read news from Moody's:
Default is a choice, not a mandate if debt ceiling is not raised.
Sorry, not news any more. It was Oct 7th.
Well, they seem to be reaching a deal anyways. The worst casualties I think are people like us. We did not vote for either party and yet their standstill causes damage to portfolios all over the world. Americans get to vote their dissatisfaction during elections, what can the rest of us do? It's like their citizens get to vote for policies affecting 7 billion people.